News
Friday, June 01, 2012
Growth up, inflation down
* Economic Survey reveals GDP growth went up by 0.7% as compared to 3% of the last year, still it missed the target of 4.2%
* Inflation stood at 10.8%, compared to 13.8% during previous fiscal year
* Tax collection went up an ‘unprecedented’ 25%
* Govt reduced its expenses by 10%
* Shaikh terms 2011-12 a new beginning
By Sajid Chaudhry
ISLAMABAD: Pakistan saw its GDP grow to 3.7 percent in the fiscal year 2011-12 as opposed to the 3% in the preceding year, however, the country still missed the 4.2% growth target, reveals the Economic Survey of Pakistan 2011-12, which was released on Thursday.
Addressing a press conference at the launching ceremony of the survey, Finance Minister Dr Abdul Hafeez Shaikh said that during the outgoing year the country’s economy was affected by global meltdown, low investments and natural calamities including floods, however, despite all this the economy moved forward. He said inflation was slowing down as consumer price index - (CPI) based inflation was down at 10.8% during July-May period this fiscal as compared to 13.8% in the same period last fiscal.
Similarly, he said the wholesale price index (WPI) was down at 11.2% as compared to 21% last year; meanwhile, sensitive price indicator (SPI) declined to 8.5 percent from 18%. The finance minister termed fiscal 2011-12 as beginning of a journey towards higher economic growth, and said that in the next few years country’s GDP growth would be much higher, with annual growth rate of 5 to 6 percent in medium term.
He told the briefing that year 2011-12 proved to be important for Pakistan’s economy, and said regional security situation was not as good as required, desired foreign direct investment level could not be achieved, while floods in Sindh also increased economic difficulties. Despite all these challenges, he said, the country’s economy posted GDP growth of 3.7% against the target of 4.2%. He termed the 3.7% GDP growth as highest in last three years, and said that by taking difficult decisions government has been able to achieve higher growth.
Dr Shaikh said tax collections during the first 10 months of fiscal 2011-12 witnessed historic increase of 25%. He said Rs 1,490 billion tax collection was recorded during July-April (2011-12) as compared to the collection of Rs 1,250 billion in the preceding year. He added that an overall 25% increase in taxes is expected during the year. Hafeez said the government has released Rs 300 billion under the Public Sector Development Programme (PSDP) during the outgoing fiscal year, and this amount was utilised on development projects.
The minister noted that the country suffered loss of $3 billion due to floods and this was reflected in the overall growth. He said if the base of last year had not been increased, the GDP growth for the fiscal year 2011-12 would be about four percent. The government, he said, had reduced its expenses by 10%. “We have adopted a tight monetary policy.” He said the government decreased borrowings and increased tax revenue collection to bring down inflation.
On the oil prices, he said they were linked with the international market and since they remained high, the government was forced to increase them accordingly in the country. However, he said that the oil prices may decrease during the next year because these have started to come down in the international market. The Afghan Transit Trade Agreement (APTTA) has encouraged formal trade between Pakistan and Afghanistan, Hafeez said, adding that its volume has risen to around $2.5 billion annually. According to the economic survey, efforts are underway to formalise free trade agreements and preferential trade agreements with many countries.
Courtesy www.dailytimes.com.pk